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China Stocks Continue Gradual Climb

China stocks eased to another year-high close in Hong Kong Tuesday on a wave of economic optimism.

The Hang Seng Index rose 0.2% to 22,324 in light turnover, after closing at year-best levels Monday and last Wednesday. The index of Chinese companies, which had outperformed in the last couple weeks, slipped 0.02% to 10,992 as A-shares on the Mainland retreated from their recent rally.

Good Chinese manufacturing, retailing and other statistics are fueling the consensus that the economy is rebounding from a seven-quarter drop in growth. And a major economic policy conference expected on Saturday may announce new stimulative measures with a goal to promote urbanization, some analysts say.

“Momentum is quite strong, even as the end of the year approaches,” said Steven Leung, director of institutional sales at UOB Kay Hian. He told Equities he thinks the Hang Seng will keep rising this month, with strong resistance at 23,000.

“A lot of sectors that relate to China’s economic performance in 2013 are doing well,” he said.

The urbanization theme will help infrastructure plays like cement and steel, Leung said. He likes cement producer CNMB (3323, HK) and Angang Steel (ANGGY). The government also apparently wants to promote domestic consumption, Leung said, which will help department stores Intime (INTIY) and Golden Eagle (GDNEY). End

Chinese Stocks in the U.S.: +2.0, 384.4, 12-10-12, Bank of New York Mellon, ADR Index-China - closed by storm

Insight: Hong Kong blue chips ended at a year-high for the second-straight day after trading in a narrow range. New government incentives helped fertilizer producers: China Agrotech (CAGTF)rose 6%. However, infrastructure and railway stocks lost ground: China Railway Construction (CWYCX) dropped more than 3%. KGI Research

Quotable: "We did not see the chance of a breakthrough in the short term. HSI will continue to seesaw within the range of the two uptrends." Core Pacific Yamaichi, Technical Analysis. 12-11-12

Chinese Company to Watch: Angang Steel (ANGGY) "Upbeat market sentiment and improving profitability will lead to re-rating for Angang." Guoco Capital. 12-11-12

Brokerages and analysts cited here have disclaimers on their websites emphasizing their statements are for information only. They do not endorse my blog, and I don’t endorse them.

For a list of Chinese companies sold in the U.S. and information on each company go to http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN

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